U.S. Should Get Tougher on China’s Deal Making

By EDWARD WONG

The Yangshan Deep Water Port in Shanghai in September. The panel’s report this year took a critical look at the free-trade relationship between the United States and China — for example, implying that the two countries are not competing on a level playing field. 

Congress should exercise greater scrutiny over trade and investment practices between the United States and China in order to prevent China from taking advantage of the economic relationship, a congressional commission said in a report released on Wednesday.
In its long list of recommendations, the commission advised Congress to authorize a government panel that reviews foreign takeover deals to bar Chinese state-owned companies from acquiring or gaining “effective control” of American companies. 

It also said Congress should ask a government watchdog agency to write a report on whether large-scale outsourcing of manufacturing to China “is leading to the hollowing out of the defense industrial base.”
The commission also suggested ways in which Congress could better bring antidumping cases against China.
Each year, the U.S.-China Economic and Security Review Commission releases a report to Congress with recommendations based on months of research. 

The commission aims to make suggestions after examining trade, investment and national security issues between the two nations. 

Its recommendations are not binding.
The report this year took a critical look at the free-trade relationship between the United States and China — for example, implying that the countries are not competing on a level playing field. 

It follows a populist airing of grievances over the downsides of free trade and a globalized economy in Western nations this year. 

That helped lead to the election last week of Donald J. Trump as the next United States president and to the vote by Britons in June to leave the European Union.
China, in its recent public statements, has emphasized the tight economic ties between the two major trading partners and said the countries would benefit more from working together.
During his campaign, Mr. Trump said he would bring manufacturing jobs back to Middle America and consider imposing a 45 percent tariff on Chinese exports, as well as labeling China a currency manipulator. 

In September, after prodding from some lawmakers, the Government Accountability Office, a watchdog agency, said that it would examine whether reviews of foreign purchases should include more types of foreign investments and be broadened to define more industries as important to the nation’s economy.
The report released on Wednesday said Congress should create an office in the International Trade Administration to identify and bring antidumping and countervailing duty cases. 

Countervailing duties are imposed on goods to offset the fact that the goods may have been made with the help of subsidies.
Besides trade and investment, the report covers topics like security relations, China’s global footprint and the United States’ rebalancing to Asia.
In one section, the authors criticize meager American government efforts to block intelligence collection by China. 

The Obama administration has expressed concern over what it sees as state-sponsored hacking from China in recent years.
“The U.S. government response to the threat from Chinese intelligence collection has suffered from the lack of an integrated, coordinated effort within the U.S. intelligence community,” the report said.
“The U.S. government’s efforts to counter Chinese intelligence collection operations have manifested largely as a series of espionage prosecutions rather than a strategic, whole-of-government response,” it added. 

“The Obama administration has taken steps to improve cybersecurity among U.S. government agencies and defense contractors, but these measures could mitigate, not eliminate, the significant cyber espionage threats to these organizations.”

Sina Delenda Est

U.S. panel urges probe on whether China weakening U.S. militarily
By David Brunnstrom | WASHINGTON

A U.S. advisory commission warned on Wednesday that China's growing military might may make it more likely to use force to pursue its interests and called for a government probe into how far outsourcing to China has weakened the U.S. defense industry.
The annual report of the U.S.-China Economic and Security Review Commission pointed to a growing threat to U.S. national security from Chinese spying, including infiltration of U.S. organizations, and called on Congress to bar Chinese state enterprises from acquiring control of U.S. firms.
The release of the report to Congress comes a week after Donald Trump won the U.S. presidential election. 

Trump, an outspoken Republican who has vowed to take a tougher line in trade and security dealings with China than Barack Obama, will take office on Jan. 20.
The panel is a bipartisan body set up in 2000 to monitor the national security implications of the U.S. trade and economic relationship with China and to make recommendations to Congress for legislative and administrative action.
Its report also called on Congress to back more frequent U.S. Navy freedom-of-navigation operations in the South China Sea, one of the world's busiest trade routes where China's building of artificial islands with military facilities has raised concerns about future freedom of movement. 

Beijing and its neighbors have conflicting territorial claims there.
The commission said ongoing reforms of the People's Liberation Army would strengthen Beijing's hand and noted that China was close to completing its first domestically produced aircraft carrier.
"China’s pursuit of expeditionary capabilities, coupled with the aggressive trends that have been displayed in both the East and South China Seas, are compounding existing concerns about China’s rise among U.S. allies and partners in the greater Asia," the report said.
“Given its enhanced strategic lift capability, strengthened employment of special operations forces, increasing capabilities of surface vessels and aircraft, and more frequent and sophisticated experience operating abroad, China may also be more inclined to use force to protect its interests,” it said.
The panel said that U.S. responses to the threat from Chinese intelligence gathering had suffered from a lack of a coordinated effort by U.S. intelligence agencies.
It said Congress should also direct the U.S. Government Accountability Office to prepare a report "examining the extent to which large-scale outsourcing of manufacturing activities to China is leading to the hollowing out of the U.S. defense industrial base."
"This report should also detail the national security implications of a diminished domestic industrial base (including assessing any impact on U.S. military readiness), compromised U.S. military supply chains, and reduced capability to manufacture state-of-the-art military systems and equipment," it said.
The commission's report also recommended that Congress call on the U.S. State Department to produce educational materials to alert U.S. citizens overseas and students going to China to the dangers of recruitment efforts by Chinese agents.